her exceptional will discuss and gold and silver prices rallied recently ahead of the elections we'll talk about why and also is this stock of gold over estimated by thousands of tons with a nominal value close to nine hundred billion dollars well according to an essay published by the gold money foundation the answer is yes we'll hear from one of the authors james turk gold money founder and chairman about it and why it matters plus exxon mobil and johnson and johnson borrowing for less than uncle's samovar corporate bonds the new haven for investors and could this have anything to do with government policies of privatizing gains and socializing losses will this guys in loose change let's get to today's capital account.

the u.s. elections are over but the economic problems facing the country are far from over not even a day has passed and already i'm seeing channels with those are the little bars on the lower thirds saying things like countdown to fiscal cliff now this of course is the combination of automatic spending cuts and tax cuts that to its expire that would take place in january former federal reserve chairman alan greenspan was on t.v. talking about this this morning saying he doesn't think the elections will help avert this cliff take a listen. the election. has really not. very much what's going on. it will come down to the very last minute before the killer actions to. underline momentum or deficit and building up to

hundreds consequences. we do not underestimate the momentum of the deficits the debt and there are consequences nor the expansionary policies we've seen under an obama central bank is that what's reflected in goal it's been on a bit of a tear over the last few days is this chart shows and not that we proceed to the notion that one of bent is responsible for market moves in the animal spirits behind them but it is interesting that u.s. stock markets were down today the s. and p. saw its biggest decline since june according to bloomberg there was this idea short term an obama win would be better for markets than romney because it meant more money printing and more dovish central bank so what gives earlier as james turk founder of gold money and author of the book the collapse of the dollar and how to profit from it i asked what he thinks is behind the stock market move. well you know the stock market has been going up not because of the good economy because

employment is still relatively low of the stock market's been going up because of money printing and what's happened over the past couple of months is that the fed announced q e three in september but they actually haven't been purchasing any government bonds the balance sheet of the federal reserve today is the same size as it was two months ago so the fed a reserve has to put some juice into the system if it wants to get the stock market rising as a really interesting and good point now let's talk about what has returned the most to during the last obama term there is this great chart i'm going to put it up for our viewers and it shows all of these different assets and what they've returned and gold and silver lead the way now we're told by neoclassical economists and policymakers that the fed needs to print and we need to spend to get on a good growth track and rebuild a healthy economy but what does it mean that a non dividend yielding asked that two of them actually have performed the best out of all these financial assets. you know it's not really

a return on gold it's just the appreciation of gold or to be more precise the appreciation depreciation of the purchasing power of the dollar you know gold buys the same amount of crude oil it did four years ago same thing with silver what's happened is the dollar purchase a lot less because of all of this money printing you know what the federal reserve has been trying to do is to jumpstart the economy by printing all of this new money quantitative easing that's what they call it but it really hasn't had any impact you know q one didn't have much impact q e two didn't have much impact and it's unlikely that q.e. three will either all it will do is continue to depreciate the purchasing power of the dollar and as a consequence the price of gold in the price of silver will go up as the dollar loses purchasing power yet is so as you say you believe q.e. hasn't had any impact but what we have seen that has had an impact arguably is the government spending that's been going on the last four years trillion dollar plus budget deficits and the u.s.

government debt getting racked up to sixteen trillion dollars no real plan to rein it in and essentially americans voted for four more years of that i would logically argue because they voted for obama again can the us sustain us for four more years without some kind of debt crisis in your view i don't think so you know i've always felt regardless of who is in the white house that between twenty and thirteen and twenty thirteen and twenty fifteen everything would come together it's simply a mathematical equation of looking at the government's cash flow in other words how much revenue it's receiving based on economic activity and how much money it spending and likely to spend you know over this period of time and i think we're going to hit the crunch still within the twenty thirteen to twenty fifteen timeframe oh ok while so there is a prediction there that you're sticking to and now of course short term everyone in the u.s. is talking about the fiscal cliff and the elections were yesterday today alan greenspan former fed chairman on t.v.

talking about how we need a roadmap. to avoid the fiscal cliff and we can't do this last minute business as they do on capitol hill and he's worried that's going to continue because still we have a congress and a white house that are divided my question is was so many people pushing for some kind of a solution to the deficit to the debt in the united states and with washington unable to come to any compromise isn't the fiscal cliff at least something that chivas some kind of action in terms of helping the deficit situation and does the fact that people are so freaked out about it in really urging against it shows that there's really no tolerance for economic pain at all to deal with the deficit. yeah i think you're absolutely right and one of the things that i think we can expect over the next couple of months is another downgrade in the u.s. credit rating simply because of the size of the deficits and the inability or unwillingness of washington to come to grips with that and to put the country onto

a path going back toward in the right direction and in improving the country solvency but you know the present situation is unsustainable and you know it is going to i think result in some kind of a blow up in the not to distant future but the important thing i think lauren is that the there's a more important concept the fiscal cliff it's really a currency cliff what's going to happen is the dollar is going to continue to lose purchasing power because of inflation and probably also declining against other currencies as well but at least inflation will be picking up purchasing power will be declining and you know the cause of the dollar is going to go over the cliff and that's more worrying because once the dollar goes over the cliff then it's likely that the economy could be irreparably damaged while and the currency cliff is something i want to get to more when we look at what you found and your recent paper about gold but first before we get into that kind of thing to get about nicely oil today which is for sure a bellwether of where people think growth is going to be i would. yes because it's

a major input so it felt the most according to bloomberg since november of two thousand and eleven why do you think it's falling it's the same reason the stock market is falling you know the federal reserve hasn't been injecting any money into the system and you know there was an expression that came out decades ago by a newsletter rather by the name of richard russell he said inflate or die and you know that's basically the system as it exists today the federal reserve has to keep inflating or the system is going to collapse because the federal reserve has expanded its balance sheet over the cup the last couple of months you know there's been a lot of talk about doing it but the market wants to see some action and as a consequence you're seeing a sell off pretty much across the board in most markets really interesting and speaking of central bank inflating one thing you look at oil prices they look very different depending on which currency you're looking at i want to bring up a chart and this is from gold money this is this is your chart and it shows that crude oil prices from the seventy's to june of two thousand and twelve and pounds

and dollars and euros and gold grams and what's incredible is that the purchasing power of gold in terms of oil it's been able to buy the same amount for decades unlike all of these other national currencies why is that. it's basically because gold is money it's not consumed like other assets it's accumulated in this above ground stock of gold grows by approximately the same amount as world population and new wealth creation so over long periods of time gold has consistency in purchasing power that's what i was saying earlier it's not that the price of gold is going up it's that the purchasing power of the dollars is going down you know an ounce of gold buys the same amount of crude oil it did forty fifty sixty years ago. that shows that it's not a good investment because it hasn't increased your wealth but it shows that it's very good money because it does one of the important things that money is supposed to do which is to preserve purchasing power over

a long. roots of time right on like all of these other national currencies and when we're talking about the gold stocks you actually found in your research that the stock of gold you've found is less than is widely reported you put it a little over fifteen thousand tons versus the just more than one hundred seventy one thousand tons that is widely reported this is a difference of about sixteen thousand tons or eight hundred seventy seven billion dollars in nominal terms so what is this research based on and why does this matter . well it does matter because you know there's a difference between physical gold and paper gold and there's a lot of paper gold out there but you know paper gold isn't really gold it's just exposure to the gold price and that exposure to the gold price comes with counterparty risk in other words it's a financial asset whereas physical gold is a tangible asset and as you work through a financial crisis you know we've been in one for a few years and it's going to continue for a few more years people ultimately move out of financial assets into tangibles and

the same thing is going to happen in gold the fact that there's less physical gold here ultimately means that the panic or the scramble in to out of paper gold and into physical gold is probably going to be even more dramatic than than people expect simply because there's a lot less physical gold than people have been led to believe over the past several years interesting what does that mean for the price do you think. well you know in the longer term and ultimately means the price is probably going to go even higher than what i've been expecting you know if you have less supply of something than what people think ultimately it's reflected in the price in the price is going to go higher and we're mighty price is going to go higher anyway lauren simply because of the dollar debasement and the other. factors that are going on. around the world and remind us what your projections of colleges for anybody that i can remember off the top of their head. well i've been sticking to this. forecast that i made back in two thousand and three when gold was three hundred fifty dollars an ounce i was

saying that between twenty thirteen and twenty fifteen it was going to be a thousand dollars an ounce and the dow would be eight thousand so you'd have a one to one relationship between gold and the dow just like you did at the end of last bust which was one nine hundred eighty when gold was one to one eight hundred and gold and eight hundred and and just like you did back in one thousand thirty set the end of that past when you had gold at thirty five in the dow thirty five so you know this one to one relationship continues to reappear and i think that's ultimately where we're headed but you know if the fed continues on this monetary monetary. i think the gold price could go much higher. and for reference because mr referred to it here is a look at the fed's balance sheet since two thousand and seven of course you can see major increases however if you focus in on the last year over there on the far right you can see it has been relatively flat which was exactly what he was talking about not enough liquidity of feed that drug addiction of the markets and still

ahead there were more protests in greece as thousands marched on parliament while politicians voted on the country's austerity budget that's right the eurozone crisis is still a brew and we will get james turk view from the other side of the pond but first your closing market numbers. it was.

it was it was.

let me explain by sort of i don't agree you don't agree with. my son isn't isn't it mary and i don't know what is going to be for you shared. your country. is a country which. includes the border in hope to help you find me. some space. to. welcome back from the euro zone crisis yet still going on to the debate over the

banks gold reserves and if there are accounted for truly i continue talking about it all with james turk founder of gold money. and you want to bring up another one of the charts from your report that shows a gold stock since fourteen ninety two and gold grams per capita why is this significant is it because this shows a smooth rise versus the more volatile jumps of national currencies or are what. yeah that's exactly right you know milton friedman had a number of. postulates for the monetary theory the quantity theory of money that he developed and one of those was what was called the cave rule basically that the money supply should be increased by a constant amount every year year in and year out regardless of economic conditions because only in that kind of environment would you be able to control inflation now if you look at the dollar supply increases year after year it's been basically all

over the place and at a much higher rate than population growth and new wealth creation where's the above gunstock of gold grows by about one point eight percent per annum consistently year after year and the reason why this happened is happens is simply because of the fortuitous way in which gold is dispersed in the earth's crust that you know as the population gets larger goals gets harder to find but the technology makes it possible that we can continue to increase this ever increasing stock of of gold by one point eight percent per annum which just fits perfectly milton friedman's theories with regard to the quantity of money which is so incredible that mother nature and just good old supply and demand is much more effective for purchasing power it would seem and value then central planners imagine that is that the big takeaway here. that's one of the big takeaways you know gold's been money for five thousand years we've been fooling around with these feeder currencies backed by nothing for only forty years we can see all of the problems that we have today with

these currencies and we can see you know the purchasing power of gold today has the same purchasing power as it did you know fifty sixty years ago when we were talking about before so in my mind ultimately we're going to come back to gold you know governments that come back quick picking and screaming back to gold or they're going to do willingly hopefully they'll do it willingly because in that way they can plan for a smooth transition back to a so solid monetary base rather than continuing to follow this path that they're now doing which ultimately could lead to you know economic problems severe economic problems as dollars continue to lose purchasing power governments typically at least in my lifetime don't seem like they are into it in a planned matter at least not in the united states but i am curious about germany because there's been some concern about the german central banks gold holdings and actually an executive board member of the bundesbank did recently address these concerns in a speech and said that these are unfounded irrational fears that gold is saved that

the food is bank has always had a great relationship with the federal reserve and i'm curious what your thoughts are about this debate on germany's goal and i do want to point out that at least this executive committee member did acknowledge the importance of gold. the issue is where is that going to spank scold you know a lot of it has been stored outside of germany but you have to look at it from a geopolitical point of view owner ing ownership of gold is one of the pillars underbelly underneath a country's sovereignty where does the u.s. store its gold its stores its gold and united states why should germany's store it's cold outside of germany it should store within germany in my view gold is dispersed in a variety of different central bank vaults around the world by many countries because of the remnants of the old gold standard where gold was moved from one part of the ball to another part of the fall to settle international transactions but we

stopped that system forty years ago you know gold is now used as a reserve in case you need it for a rainy day or to rebuild the currency and with all of the problems in europe today with the euro and the fact that the european central bank is not following bonus bank monetary discipline i think it would probably make sense for germany to return its gold keep it in frankfurt under the in the vaults underneath the fund this bank just in case that's very interesting is there an accurate or public accounting of all four central banks like the bennett thank you really know if it's all accounted for no no no not really because if you look at the central bank's balance sheet they book one line item they call it gold and gold receivables in other words they're mixing gold in the vault with gold out in loan as the same line item which doesn't conform with generally accepted accounting principles but the i.m.f. allows the central banks to do that in fact if you look at the bonus bank act in

relation to german germany's gold section twenty six says that they have to prepare their annual that consecrating the generally accepted accounting principles but nevertheless they look gold and gold receivables as one line item which. doesn't conform with generally accepted accounting principles and i've understood understood from people who've asked the biggest bank about this is because they the i.m.f. asks them to report that way rather than conforming with the letter of the law of the voters bank act itself oh and we know how tricky accounting shenanigans can be now i apologize if we get cut off but i do want to ask your views on europe currently sitting in london we've been so focused on u.s. elections right now the protests in greece today what's your assessment right now in terms of the temperature of the the sickness in europe right now. the situation in europe continues to deteriorate. the economic activity here is bad

and it's getting worse simply because there's more government involvement more government intervention in the free market process so i think you're going to see more protests not just in southern europe but other parts of europe as well you know as the economy continues to deteriorate i don't see any likelihood of a bounce in european economic activity in the forseeable future and that's pretty ominous pretty ominous we're going to leave it on that dark thought but you brought a lot of light to the discussion today so thank you so much james stark it's always a pleasure to talk to you thank you lauren.

let's wrap up with loose change dimitri kovtun as our face full producer is here to talk about the election let's obviously touch on something that hasn't been hashed over a million times but a couple things so i think it's interesting that obama's the first president to keep the oval office while having the highest unemployment rate of anyone since f.d.r. in one nine hundred thirty six only the second president since world war two besides ronald reagan to win reelection with the jobless rate above six percent what do you think this says do you think that says that americans are hopeless about the job situation that they feel like neither candidate that mitt romney is not a solution to jobs but yet obama who hasn't been a solution to jobs they're willing to stick with i think there's a lot of things but the overall message is that americans have an extremely low self-esteem and low. expectations standard they like the. keep your expectations very low because obviously because what i mean when you're we're talking about jobs

i'm concerned about jobs you're not concerned because of your expectations your ego your concern because you need to europe right now what are you going to do if you're going to get your for the people lauren obama are you kidding me am i saying romney's any better what exactly has obama done all the things that he was supposed to do that on civil liberties i mean is that i was reverse ya know the whole i'm sitting on those things what does he believe i mean he's blown out the deficit and he just spends i understand there are a lot of people out there that have this crazy idea that that's what we need we need more more money printing and spending and running up deficits but i'm sort of said we need so sorry america you elected a disaster for the first four years and you elected again for another four years so congratulations let's see if we can actually make it through the next four without actually falling off a real cliff right way james turk who we just talked to doesn't think so but you know there's more coverage that we the by telling some machine to machine guns one of the issues that that will be one of the first to be resolved according to reports is who obama's treasury secretary is going to be we know how key this

position is who is going to fill tim geitner shoes some are suggesting jack lew. number one he's extremely close to the president he has the president's confidence and it's very important that the person who holds that job as tim geitner is had has the strong backing of the president united states is number two asset also very strong is that he knows his way around washington extraordinarily well and most specifically around the budget and tax issues will be rich will be front and center . dmitri can you guess is number three asset according to me now he's easy easy in what way he's easy as an easy easy money man. well i don't know but he is from wall street he was at citi group he executive was there alternative investments so he fits the protocol perfectly as i let him in there i think this is this is

ridiculous obama says blankfein treasury secretary. said krugman at the central bank in washington head of the preserve because you know academic in there who really believes in ramping up the printing presses i don't think at this point you should be playing around i mean if you want to go all the way to go all the way those stories already like you know i want to talk research a hundred percent yes that's over all the way yeah totally really quickly before we go we should get to this story because we teased at the beginning. here last year on meet the press alan greenspan was asked if u.s. treasuries are a safe investment here's how he responded. the united states can. print money to do this the result. of the. ok whatever will now try to reach have a new rival for safe haven status u.s. companies exxon and johnson and johnson bond trading with yields below comparable treasuries money is pouring into corporate bonds what do you think this says

corporations are more powerful than governments yeah quick point as i said before contrary to popular belief in point of fact if the federal reserve were not buying treasuries the yields in my opinion on those traders would be lower because the fed is keeping the roof up on there are people able to speculate in other in other assets including hydro corporate debt which is perform better than equities and sovereign debt we have our second i would like you to tell our audience well because i had i had this little thing on facebook when i was talking about a disney float disney floated some ten year bonds or twenty or bonds out and then compared it to the french guild i mean you know i've seconds or i don't talk glory do you don't go to our facebook if they want to see what he's talking about because that is all we have time for thank you so much for watching come back tomorrow in meantime you can follow me on twitter at lauren lyster got our facebook page like it look at dimitri's posts watch us on you tube or hulu and have a great. m

c and i mean. i'm going to see you have to be good student but. i didn't r t exclusive friday through sunday on r t r t dot com. do we speak your language i mean some of the little enough to do. with these programs documentaries and spanish matches two years. breaking news a little turn to angle the stories. you hear. that try altie spanish find out more visit eye to eye on t.v.

dogs comb. admission and free accreditation free transfer charges free. range and free risk free studio tied for free. download free broadcast quality video for your media projects and a free media dog hearty dot com you.